Montreal-based Osisko Gold Royalties Ltd. is buying Stornoway Diamond Corp. in partnership with its creditors as the Longueuil, Que.-based gem miner files for bankruptcy protection.
The agreement stemming from a June letter of intent will see Osisko and other creditors assume all debts and liabilities of Stornoway while continuing to operate its Renard diamond mine in Quebec by supplying $20 million in working capital, according to a company filing to the provincial Superior Court.
“The continued downward pressure on the market price for rough diamonds, as well as a variety of other factors and circumstances, have contributed to the corporation’s inability to generate positive free cash flow in 2019, and to maintain an adequate level of working capital,” the company said in the filing.
“It’s in the best interests” of the company “as well as those of their respective stakeholders to seek protection” after no other third-party bids for the miner emerged since June, it added.
Osisko is to reinvest its 9.6 per cent revenue stream from Renard back into the mine for at least a year, the company said.
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